UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-QSB



[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE
SECURITIES EXCHANGE ACT OF 1934



[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR

15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934



For the
quarterly period ended: June 30, 2003



Commission
file number 000-30009



PETROL
OIL AND GAS, INC.

(Exact
name of registrant as specified in its charter)



Nevada                                                                                                       
88-0453323

(State or other
jurisdiction
of                                                               
(I.R.S. Employer

incorporation or
organization)                                                    
Identification Number)



2300 Patrick Lane,
Suite 26

Las Vegas, Nevada                                                                                             
89119

(Address of Principal
Executive
Offices)                                                     
(Zip Code)



(702)
454-3394

(Registrant's
telephone number, including area code)



Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the last 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.



Yes X    
No ____



The number of shares of Common Stock, $0.001 par value, outstanding on August 1,
2003, was 14,896,993 shares, held by approximately 43 shareholders.



Transitional Small Business Disclosure Format (check one):



Yes    
No X





ITEM 1. FINANCIAL
STATEMENTS



Petrol
Oil & Gas, Inc.

(A
Development Stage Company)

Condensed
Balance Sheet



|                                                                                                                                                            | June
      30,
      2003 | December
      31,
      2002
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -----------------------------
|                                                                                                                                                            | (unaudited)               |                              
|Assets                                                                                                                                                      |                           |                              
|Current assets:                                                                                                                                             |                           |                              
|Cash                                                                                                                                                        | $
      19,488            | $
      161,836              
|                                                                                                                                                            |                           |                              
|Equipment                                                                                                                                                   | 1,600                     | --                           
|Accumulated
      depreciation                                                                                                                              | (80)                      | --                           
|                                                                                                                                                            | 1,520                     | --                           
|                                                                                                                                                            |                           |                              
|Oil and gas
      properties using full cost accounting:                                                                                                    |                           |                              
|Properties
      not subject to amortization                                                                                                                | 809,374                   | 282,956                      
|Total assets                                                                                                                                                | $
      830,382           | $
      444,792              
|                                                                                                                                                            |                           |                              
|Liabilities and
      shareholders' equity                                                                                                                  |                           |                              
|Current
      liabilities:                                                                                                                                  |                           |                              
|Note
      payable to bank                                                                                                                                  | $
      240,000           | $
      --                   
|Accounts
      payable                                                                                                                                      | 103,410                   | 109,969                      
|Due to
      officer                                                                                                                                        | 47,500                    | 25,000                       
|Total current liabilities                                                                                                                                   | 390,910                   | 134,969                      
|                                                                                                                                                            |                           |                              
|Contingencies and
      commitments                                                                                                                         |                           |                              
|Shareholders'
      equity:                                                                                                                                 |                           |                              
|Preferred
      stock, $.001 par, authorized 10,000,000 shares; no shares issued                                                                            | --                        | --                           
|Common
      stock, $.001 par, authorized 100,000,000 shares; 14,896,993 and 13,151,993
      issued and outstanding at June 30, 2003 and December 31, 2002 | 14,897                    | 13,152                       
|Stock for
      services not issued 40,000 and 215,000 shares at June 30, 2003 and
      December 31, 2002                                                  | 30,000                    | 107,500                      
|Unamortized cost of stock issued for services                                                                                                               | (1,000)                   | --                           
|Additional
      paid in capital                                                                                                                            | 1,403,125                 | 898,870                      
|Deficit
      accumulated under the development stage                                                                                                       | (1,007,550)               | (709,699)                    
|                                                                                                                                                            | 439,472                   | 309,823                      
|                                                                                                                                                            | $
      830,382           | $
      444,792              



See
notes to condensed financial statements.





Petrol
Oil & Gas, Inc.

(A
Development Stage Company)

Condensed
Statement of Operations

Unaudited



|                                           | Six Months Ended June 30, | Three Months Ended June 30, | March 3, 2002 (inception) to June 30, 2003
|------------------------------------------ | ------------------------- | --------------------------- | ------------------------------------------
|                                           | 2003                      | 2002                        | 2003                                      
|Revenue:                                   | $
      --                | $
      --                  | $
      --                                
|                                           |                           |                             |                                           
|Professional
      and consulting fees     | 168,213                   | --                          | 82,718                                    
|Wages                                      | 67,500                    | --                          | 33,750                                    
|Travel                                     | 23,123                    | --                          | 16,058                                    
|Miscellaneous
      expense                | 39,015                    | 22                          | 18,840                                    
|                                           |                           |                             |                                           
|Net
      loss                             | $
      (297,851)         | $
      (22)                | $
      (151,366)                         
|                                           |                           |                             |                                           
|                                           |                           |                             |                                           
|                                           |                           |                             |                                           
|Basic
      and diluted earnings per share | $
      (0.02)            | $
      (0.00)              | $
      (0.01)                            
|                                           |                           |                             |                                           
|Weighted
      shares outstanding          | 12,018,857                | 6,476,240                   | 12,018,857                                



See
notes to condensed financial statements.





Petrol
Oil & Gas, Inc.

(A
Development Stage Company)

Condensed
Statement of Cash Flows

Unaudited



|                                                                                    | Six Months Ended June 30, | March 3, 2000 (inception) to June 30,
      2003
|----------------------------------------------------------------------------------- | ------------------------- | ------------------------------------------------
|                                                                                   
|                                                                                    | 2003                      | 2002                                            
|Operating
      activities:                                                         |                           |                                                 
|Net loss                                                                            | $
      (297,851)         | $
      (22)                                    
|Adjustments to
      reconcile net income to net cash used in operating activities- |                           |                                                 
|Depreciation                                                                        | 80                        | --                                              
|Stock and options
      issued for services                                         | 90,000                    | --                                              
|Change in assets
      and liabilities-                                             |                           |                                                 
|Accounts payable                                                                    | (6,559)                   | --                                              
|Due to officer                                                                      | 22,500                    | --                                              
|                                                                                    |                           |                                                 
|Cash used in
      operating activities                                             | (191,830)                 | --                                              
|                                                                                    |                           |                                                 
|Investing
      activities:                                                         |                           |                                                 
|Equipment
      purchase                                                            | (1,600)                   | --                                              
|Additions to oil
      & gas property not subject to amortization                   | (526,418)                 | --                                              
|                                                                                    |                           |                                                 
|Cash used in
      investing activities                                             | (528,018)                 | --                                              
|                                                                                    |                           |                                                 
|Financing
      activities:                                                         |                           |                                                 
|Stock issued for
      debt paid by shareholder of Company stock                    | --                        | 22                                              
|Note payable to
      bank                                                          | 240,000                   | --                                              
|Stock sold                                                                          | 337,500                   | --                                              
|                                                                                    |                           |                                                 
|Cash provided
      from financing activities                                       | 577,500                   | 22                                              
|                                                                                    |                           |                                                 
|Increase in cash                                                                    | (142,348)                 | --                                              
|Beginning cash                                                                      | 161,836                   | --                                              
|Ending cash                                                                         | $
      19,488            | $
      --                                      
|                                                                                    |                           |                                                 
|Supplemental cash
      flow information:                                           |                           |                                                 
|Interest paid                                                                       | $
      --                | $
      --                                      
|Income taxes paid                                                                   | $
      --                | $
      --                                      
|                                                                                    |                           |                                                 
|Non cash
      financing activities:                                                |                           |                                                 
|Stock issued for
      assets acquired                                              | $
      --                | $
      --                                      
|Addition to oil
      & gas property not                                            |                           |                                                 
|subject to
      amortization and accounts payable                                  |                           |                                                 
|assumed in asset
      purchase                                                     | --                        | --                                              
|Stock contributed
      to paid in capital                                          | --                        | --                                              
|Unamortized cost
      of stock issued for services                                 | 1,000                     | --                                              
|Stock for
      services not issued                                                 | 30,000                    | --                                              
|Stock and options
      issued for services                                         | 60,000                    | --                                              



See
notes to condensed financial statements.





Petrol
Oil & Gas, Inc.

Notes To
Condensed Financial Statements



Note 1 -Basis of
Presentation



The unaudited condensed financial statements have been prepared in accordance
with United States generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation. All such adjustments are of a normal recurring nature. The results
of operations for the interim period are not necessarily indicative of the
results to be expected for a full year. Certain amounts in the prior year
statements have been reclassified to conform to the current year presentations.
The statements should be read in conjunction with the financial statements and
footnotes thereto included in the company's Form 10-KSB for the year ended
December 31, 2002.



Note 2 -Going Concern



The accompanying condensed financial statements have been prepared using the
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The ability of the Company to continue as a going
concern is dependent upon the ability in its endeavors to seek additional
sources of capital, and in attaining future profitable operations. Management is
currently initiating their business plan and in the process of raising
additional capital. The accompanying financial statements do not include any
adjustments that might be necessary should the company be unable to continue as
a going concern.



Note 3 -Stock
Transactions



The Company sold 100,000 shares of common stock during the quarter at a price of
$.75 per share net of any costs associated with the sale.



Pursuant to a consulting agreement with William Stoeckinger, the Company owed
Mr. Stoeckinger 20,000 shares each for April, May and June. The value assigned
to the consulting fee was $.75 per share for a total expense of $45,000. 40,000
shares were not issued at June 30, 2003 and $30,000 is recorded in the equity
section as shares for services not issued.



The Company, on April 18, 2003, issued 1,000,000 shares of its common stock to
Cornerstone Bank as collateral for a note payable to the bank. The Company, on
July 7, 2003, paid off the note and the bank is in the process of returning the
shares to be cancelled. The par value of the shares of $1,000 was recorded as
common stock with an offsetting amount recorded as a reduction of equity under
the account unamortized cost of stock issued for services.



Note 4-Note Payable



The Company borrowed $240,000 from Cornerstone Bank under a note that was due
August 3, 2003. Interest was 2% over the corporate base rate (6.25% at 2/6/03).
The note was repaid July 7, 2003.





Petrol
Oil & Gas, Inc.

Notes To
Condensed Financial Statements



Note 5-Subsequent
Events



On July 2, 2003, the Company received a $400,000 loan from CPA Directed
Investments (CPA). The interest rate on the loan is 10% per annum. The Company
issued on 7/7/03 1,000,000 shares of common stock as collateral to be held by
CPA until the loan is paid in full. Pursuant to the loan agreement, upon the
occurrence and during a continuance of default, all remaining amounts of the
loan shall, at the option of CPA, become immediately due and payable, and CPA
may exercise at any time any rights and remedies available to it under
applicable law of the State of Nevada. The loan is due and payable upon the
earlier of: (i)180 days from the date of the agreement, or (ii) within 30 days
from closing of the Company's registered offering.



Item 2.
Plan of Operation



This report contains forward-looking statements. Actual results and events could
differ materially from those projected, anticipated, or implicit, in the
forward-looking statements as a result of the risk factors set forth below and
elsewhere in this report.



With the exception of historical matters, the matters discussed herein are
forward-looking statements that involve risks and uncertainties. Forward-looking
statements include, but are not limited to, statements concerning anticipated
trends in revenues and net income, the date of introduction or completion of our
development and production efforts, projections concerning operations and
available cash flow. Our actual results could differ materially from the results
discussed in such forward-looking statements primarily as the result of
insufficient cash to pursue production and development efforts. The following
discussion of our plan of operation should be read in conjunction with our
financial statements and the related notes thereto appearing elsewhere herein.



Overview



Petrol Oil and Gas, Inc., a development stage company was incorporated in the
State of Nevada on March 3, 2000. We are structured to engage in the
exploration, development, acquisition and operation of oil and gas properties.
Since our inception, we have not been engaged in any significant operations nor
have we had any revenues. Our only recent activities include organization, the
negotiation and execution of an asset purchase agreement, and we have registered
our securities with the Securities and Exchange Commission in order to raise
additional capital and make our financial information equally available to
investors or other interested parties. Once we complete the sale of our
securities, we intend to contact an authorized NASD market maker for sponsorship
of our securities on the Over-the-Counter Electronic Bulletin Board. We believe
we will be able to complete that process by the end of fiscal 2003.



Plan of
Operation



During the next twelve months we plan to focus our efforts on increasing our
production and reserves of natural gas through the development of our existing
properties, raising additional equity capital and furthering our business plan.





We intend to fund portions of our field operations through revenues obtained
from sales of our CBM gas production, if any. To accelerate the development
program we plan to take on working interest (WI) partners that will contribute
to the costs of drilling and completion and then share in revenues derived from
production. This economic strategy may allow us to utilize our own financial
assets toward the growth of our leased acreage holdings, pursue the acquisition
of strategic oil and gas producing companies and generally expand our existing
operations.



Because of our limited operating history we have yet to generate revenues from
the sale of oil or natural gas. Our current operation is based upon an
acquisition of mineral leases from Petrol Energy, Inc. Our activities have been
limited to the negotiation of an agreement and preliminary analysis.
Consequently, we have incurred the expenses of start-up.



Our future financial results will depend primarily on: (i) the ability to
continue to source and screen potential projects; (ii) the ability to discover
commercial quantities of natural gas and oil; (iii) the market price for oil and
gas; and (iv) the ability to fully implement our exploration and development
program, which is dependent on the availability of capital resources. We cannot
guarantee that we will be successful in any of these respects, that the prices
of oil and gas prevailing at the time of production will be at a level allowing
for profitable production, or that we will be able to obtain additional funding
to increase our currently limited capital resources.



We anticipate the need for at least $5,000,000, the maximum proceeds we are
attempting to raise through our registered offering, of capital over the next 12
months. If we do not raise the maximum proceeds, any additional funds needed may
be raised through equity financing, debt financing, or other sources, which may
result in further dilution in the equity ownership of our stockholders. There is
still no assurance that, even with the funds from the registration and a
subsequent private placement, if needed, we will be able to maintain operations
at a level sufficient for an investor to obtain a return on their investment in
our common stock. Further, we may continue to be unprofitable for an indefinite
period of time.



We are unable to provide an accurate breakdown to the use of funds to be
received from any future private placement as the usage will be solely based
upon the outcome of our initial exploration and development program. We have
anticipated the need to hire additional staff, continue development and
refinement of our operations to meet customer needs and provide additional
working capital for our operations.



We will face considerable risk in each of our business plan steps, such as
difficulty of hiring competent personnel within our budget and a shortfall of
funding due to our inability to raise capital in the equity securities market.
If no funding is received during the next twelve months, we will be forced to
rely on existing cash in the bank and funds received from the offering.



We have no operating history, no significant current operations, minimum cash on
hand, and no profit. Because of these factors, our auditors have issued an audit
opinion for Petrol which includes a statement describing our going concern
status. This means there is substantial doubt about our ability to continue as a
going concern. While we believe we have made good faith estimates of our ability
to secure additional capital in the future to reach our goals, there is no
guarantee that we will receive sufficient funding to implement any future
business plan steps.





Our future operating results will depend on many factors, including our ability
to raise adequate working capital, demand for our oil and gas production, the
level of competition and our ability to deliver products while maintaining
quality and controlling costs.



Field
Development



Our current plan of operation for field development starts with identifying the
most promising and cost-effective drill sites on our current leased acres,
drilling and testing wells to prove reserves, completing the more promising test
wells, extracting the oil, gas and other hydrocarbons that we find, and
delivering them to market. Although we believe that we have leased enough land
to move forward with our field development, we will have to obtain additional
financing before we can fully implement this next phase of our operations.



Field development operations began in August 2002, with the drilling and logging
of three test wells. Each test well is located on a separate mineral lease in
the southwest portion of Coffey County. These drill sites were selected based on
a variety of factors, including information gathered from historic records and
drill logs (depth, and thickness of coal seams and the results of electric gamma
ray readings), proximity to existing interstate distribution pipelines, ease of
access for drilling equipment the presence of oil and natural gas in the
immediate vicinity, and consultations with our operator and driller. Since these
are considered to be exploratory or test wells they have only been partially
completed in order to allow us to investigate the production capacity of
selected coal intervals, and to obtain important technical information related
to stimulation activities that are almost always required to make CBM wells
commercially productive. Thus, we do not presently have any estimates of oil and
gas reserves on these properties. Consequently, we have not reported our reserve
estimates to any state, or federal authority.



During this phase of our plan of operation we expect to drill, test and complete
about 40 coal-bed methane producing wells. These drilling and testing efforts
will also allow us to determine whether there are other forms of commercially
producible hydrocarbons present, such as oil or other types of natural gas. Each
well will be drilled and tested individually. If commercially producible amounts
of gas are present, the well will be fully completed and a local distribution
pipeline installed. Completed wells that are producing and connected to
distribution pipelines will begin generating revenues as soon as they begin
pumping although these revenues may be realized on a quarterly basis.



Once we have identified a proposed drilling site, we, as a licensed operator in
the State of Kansas, will be engaged in all aspects of well site operations. As
the operator, we will be responsible for permitting the well, which will include
obtaining permission from the Kansas Oil and Gas commission relative to spacing
requirements and any other state and federal environmental clearances required
at the time that the permitting process commences. Additionally, we will
formulate and deliver to all interest owners an operating agreement establishing
each participant's rights and obligations in that particular well based on the
location of the well and the ownership. In addition to the permitting process,
we as the operator will be responsible for hiring the driller, geologist and
land men to make final decisions relative to the zones to be targeted,
confirming that we have good title to each leased parcel covered by the spacing
permit and to actually drill the well to the target zones. Should the well be
successful, we will be responsible for completing the well and connecting it to
the most appropriate transmission facility for the hydrocarbons produced.





As the operator, we will be the caretaker of the well once production has
commenced. We have no formal experience in well operations and will have to hire
or retain professionals to assist us in our efforts. As the operator, we will be
responsible for paying bills related to the well, billing working interest
owners for their proportionate expenses in drilling and completing the well, and
selling the production from the well. Again, we have no experience in operating
an oil or gas production company, therefore, we will be forced to hire
experienced operation staff, when needed. Once the production has been sold, we
anticipate that the purchaser thereof will carry out its own research with
respect to ownership of that production and will send out a division order to
confirm the nature and amount of each interest owned by each interest owner.
Once a division order has been established and confirmed by the interest owners,
the production purchaser will issue the checks to each interest owner in
accordance with its appropriate interest. From that point forward, we as
operator will be responsible for maintaining the well and the wellhead site
during the entire term of the production or until such time as the operator has
been replaced or appropriately abandoned. We anticipate hiring professionals to
assist us in our operations until such time as our management has sufficient
knowledge and operations ability.



We have a working relationship and have used Well Refined Drilling of Thayer,
Kansas, to drill our first three exploratory test wells. Owner/Operator Jeffery
Kephart has been a driller since 1978, and has drilled in excess of 10,000 wells
in Kansas, Oklahoma, Texas, Wyoming, and Missouri. More than 200 of those wells
have been CBM wells. The driller will be responsible for performing or
contracting with third parties and supervising their efforts on all aspects of
the drilling operation, except for geological services.



We have a one year consulting agreement with Mr. William Stoeckinger, a
Certified Petroleum Geologist, from Bartlesville, Oklahoma to provide geological
services both in the assessment process and in the development program.



Based on our first three test wells we anticipate that each well in our targeted
area will cost approximately $35,000 to locate, drill and test, an additional
$30,000 to complete, plus an additional $350 per month per well to pay for
electricity, pulling and repairs, pumping and other miscellaneous charges. In
support of these operations we have working agreements with local third parties
to monitor and maintain our wells and perform drilling and work-over activities



If any of our wells proves to hold commercially producible gas, we will need to
install a distribution infrastructure to transport our gas from the wellhead to
one of the major distribution pipelines. We have identified several major
interstate distribution pipelines that operate within and pass through the
counties in which we have lease holdings. These include pipelines owned and
operated by Williams Energy, CMS Energy, and Enbridge. We have initiated contact
with two of these companies to ascertain the specific locations of their
pipelines, their requirements to purchase gas from us (including volume of gas
and quality of gas), and the costs to connect to their pipelines. Traditionally,
the major distributors of gas in the United States have purchased production
from anyone who can get sufficient quantities of quality gas to their
distribution pipeline. Because some of these companies have purchased coal bed
methane from producing wells in the southern part of Kansas, we believe that if
the gas produced from wells drilled in our targeted area meets their criteria in
both quantity and quality, they will purchase our gas at market prices. To date,
we have not entered into any purchase agreements nor have we received assurances
from anyone that they will enter into such agreements with us in the future.



Presently, we cannot accurately predict the costs of transporting our gas
products to these existing interstate pipelines. The cost of installing a
distribution infrastructure or local gathering





system
will vary depending upon the distance the gas must travel from our wellhead to
the compressor station and high pressure pipeline tap, and whether the gas must
be treated to meet the purchasing company's quality standards. However, based on
the close proximity of several major distribution pipelines to our leased
properties, plus our intent to drill as close to these pipelines as practicable,
we anticipate that the total cost of installing a distribution infrastructure
for ten producing wells will be approximately $150,000, or $15,000 each, plus a
one-time expense of $50,000 to tap into the high pressure interstate pipeline.



The prices obtained for oil and gas are dependent on numerous factors beyond our
control, including domestic and foreign production rates of oil and gas, market
demand and the effect of governmental regulations and incentives. We do not have
any delivery commitments with respect to any oil or gas produced from any
properties that we acquire. However, due to the U.S. government's recent push
toward increased domestic production of energy sources the high demand for
natural gas, we do not anticipate any difficulties in selling any oil and gas
that we produce, once it has been delivered to a distribution facility.



The success of this phase of our plan of operation is dependent upon our ability
to obtain additional capital to drill exploratory and test wells and also upon
our successfully finding commercially producible amounts of coal bed methane gas
or other hydrocarbons in the wells that we drill. We cannot assure you that we
will obtain the necessary capital or that we will find commercially producible
amounts of gas if our drilling operations commence.



The timing of most of our capital expenditures is discretionary. Currently there
are no material long-term commitments associated with our capital expenditure
plans. Consequently, we have a significant degree of flexibility to adjust the
level of such expenditures as circumstances warrant. We intend to primarily use
funds raised through the registered offering, funds raised from private
placements and internally generated cash flow, if any, to fund capital
expenditures and to fund our working capital needs. The level of our capital
expenditures will vary in future periods depending on energy market conditions
and other related economic factors.



Recent
Developments



On July 29, 2003, our SB-2 registration statement was declared effective by the
SEC. We are offering, up to 5,000,000 shares of our common stock at $1.00 per
share through December 31, 2003. We will be required to sell at least 500,000
shares ($500,000) in the offering before we will have use of any funds.



We have been in discussion with several individuals and entities with regards to
potential acquisitions of additional mineral lease properties, working interest
partners, farmout arrangements and consulting services. As of the date of this
filing we have not finalized any formal agreements with any individual or
entity, nor have we determined an acquisition as probable. Once a formal
agreement is finalized, if ever, we will file a Form 8-K disclosing the terms
and conditions of such agreement.



Liquidity
and Capital Resources



A critical component of our operating plan impacting our continued existence is
the ability to obtain additional capital through additional equity and/or debt
financing. We do not anticipate enough positive internal operating cash flow
until such time as we can generate substantial





revenues,
which may take the next few years to fully realize. In the event we cannot
obtain the necessary capital to pursue our strategic plan, we may have to cease
or significantly curtail our operations. This would materially impact our
ability to continue operations.



Our near term cash requirements are anticipated to be offset through the receipt
of funds from our registered offering, private placement offerings, if needed,
and loans obtained through private sources. Since inception, we have financed
cash flow requirements through debt financing and issuance of common stock for
cash and services. As we expand operational activities, we may continue to
experience net negative cash flows from operations, pending receipt of revenues,
and will be required to obtain additional financing to fund operations through
common stock offerings and bank borrowings to the extent necessary to provide
working capital.



Over the next twelve months we believe that existing capital and anticipated
funds from operations will not be sufficient to sustain operations and planned
expansion. Consequently, we will be required to seek additional capital in the
future to fund growth and expansion through additional equity or debt financing
or credit facilities. Such financing may not be available, and if available it
may take either the form of debt or equity. In either case, the financing could
have a negative impact on our financial condition and our Stockholders.



We anticipate incurring operating losses over the next twelve months. Our lack
of operating history makes predictions of future operating results difficult to
ascertain. Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets. Such
risks include, but are not limited to, an evolving and unpredictable business
model and the management of growth. To address these risks we must, among other
things, implement and successfully execute our business strategy, continue to
develop and upgrade technology and products, respond to competitive
developments, and attract, retain and motivate qualified personnel. There can be
no assurance that we will be successful in addressing such risks, and the
failure to do so can have a material adverse effect on our business prospects,
financial condition and results of operations.



Under our current plan of operation, we are required to make certain lease
payments to maintain our rights to develop and drill for oil and gas. These
lease payments are material obligations to us and our lease holdings are our
biggest asset.



As of June 30, 2003, we had assets of $830,382, and $390,910 in liabilities.
Resulting in stockholders equity of $439,472.



On February 6, 2003, we entered into a loan agreement with Cornerstone Bank,
whereby Cornerstone provided us with a line of credit in the amount of $250,000,
which was to expire on August 5, 2003. We pledged to Cornerstone Bank all of our
assets, including, but not limited to 1,000,000 shares of our $0.001 par value
common stock to be held by Cornerstone Bank as collateral until the loan was
paid in full under the terms and conditions of the agreement. On July 2, 2003,
we repaid the line of credit, including interest, and Cornerstone has returned
the shares to us for cancellation.



On July 2, 2003, we entered into a Secured Promissory Note Agreement with CPA
Directed Investments, whereby CPA loaned us $400,000. The interest rate on the
loan is 10% per annum. Proceeds from the loan were used to repay The Cornerstone
line of credit and for





general
working capital. As collateral for the loan we issued CPA 1,000,000 shares of
our $0.001 par value common stock to be held until the loan is paid in full
under the terms and conditions of the agreement. Pursuant to the agreement, upon
the occurrence and during a continuance of default, all remaining amounts of the
loan shall, at the option of CPA, become immediately due payable, and CPA may
exercise at any time rights and remedies available to it under applicable law of
the State of Nevada. The loan is due and payable upon the earlier of:



(i) 180 days from the date of the agreement; or

(ii) Within 30 days from closing our registered offering.



Item 3.
Controls and Procedures

1. Paul
    Branagan, President and Chief Accounting Officer of the Company, evaluated
    the effectiveness of the design and operation of our disclosure controls and
    procedures, as such term is defined under Rule 13a-14(c) promulgated under
    the Securities Exchange Act of 1934, as amended, within 90 days prior to the
    filing date of this report. Based on his evaluation, Mr. Branagan concluded
    that our disclosure controls and procedures are effective.
2. There
    have been no significant changes (including corrective actions with regard
    to significant deficiencies or material weaknesses) in our internal controls
    or in other factors that could significantly affect these controls
    subsequent to the date of the evaluation referenced in paragraph (a) above.

PART II--OTHER
INFORMATION



Item 1. Legal
Proceedings



None



Item 2. Changes in
Securities



On April 17, 2003, we sold 100,000 shares of common stock to an individual
accredited investor for a total purchase price of $75,000, all of which was paid
in cash. We believe that the issuance and sale of the shares was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2), Regulation D and/or Regulation S. The shares were
issued directly by us and did not involve a public offering or general
solicitation. The recipient of the shares was afforded an opportunity for
effective access to files and records of our company that contained the relevant
information needed to make their investment decision, including our financial
statements and 34 Act reports. We reasonably believed that the recipient,
immediately prior to issuing the shares, had such knowledge and experience in
our financial and business matters that they were capable of evaluating the
merits and risks of their investment. The recipient had the opportunity to speak
with our management on several occasions prior to their investment decision.
There were no commissions paid on the issuance and sale of the shares.









shares
were issued directly by us and did not involve a public offering or general
solicitation. The recipient of the shares was afforded an opportunity for
effective access to files and records of our company that contained the relevant
information needed to make their investment decision, including our financial
statements and 34 Act reports. We reasonably believed that the recipient,
immediately prior to issuing that shares, had such knowledge and experience in
our financial and business matters that they were capable of evaluating the
merits and risks of their investment. The recipient had the opportunity to speak
with our management on several occasions prior to their investment decisions.
There were no commissions paid on the issuance of the shares. On July 2, 2003,
we repaid the line of credit, including interest, and Cornerstone returned the
shares to us for cancellation.



On May 20, 2003, we issued 160,000 shares of our $0.001 par value common stock
to William Stoeckinger as a signing bonus pursuant to his Consulting Agreement
dated December 19, 2002. We also issued 80,000 shares of our $0.001 par value
common stock to Mr. Stoeckinger on May 20, 2003 for fulfilling his duties for
the months of January, February, March and April of 2003. Mr. Stoeckinger's
Consulting Agreement was filed as an exhibit to Form SB-2, filed on January 22,
2003. The shares were deemed to have been issued pursuant to an exemption
provided by section 4(2) of the Act, which exempts from registration
"transactions by an issuer not involving any public offering."



Subsequent
Events



On July 7, 2003, we issued 1,000,000 shares of our $0.001 par value common stock
to CPA Directed Investments to hold as collateral for a line of credit in the
amount of $400,000. We believe that the issuance of the shares was exempt from
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2), 4(6) and Regulation D. The shares were issued
directly by us and did not involve a public offering or general solicitation.
The recipient of the shares was afforded an opportunity for effective access to
files and records of our company that contained the relevant information needed
to make their investment decision, including our financial statements and 34 Act
reports. We reasonably believed that the recipient, immediately prior to issuing
that shares, had such knowledge and experience in our financial and business
matters that they were capable of evaluating the merits and risks of their
investment. The recipient had the opportunity to speak with our management on
several occasions prior to their investment decisions. There were no commissions
paid on the issuance of the shares.



On July 29, 2003, our SB-2 registration statement (File No. 333-102643) was
declared effective by the SEC. We are offering up to 5,000,000 shares of our
common stock at $1.00 per share through December 31, 2003. We will be required
to sell at least 500,000 shares ($500,000) in the offering before we will have
use of any funds.



Item 3.
Defaults by the Company upon its Senior Securities



None



Item 4. Submission of
Matter to a Vote of Security Holders



None





Item
5. Other Information



On August 4, 2003, we entered into a letter agreement with William Stoeckinger
to revise his Geological/Technical Advisor Consulting Agreement (the
"Agreement") which we entered into on December 19, 2002. The term of
the Agreement was to commence on December 1, 2002 and end on December 31, 2003,
and as partial consideration for Mr. Stoeckinger's services, we agreed to issue
him 20,000 shares of our common stock for every month Mr. Stoeckinger fulfilled
his duties.



To eliminate any confusion or misunderstanding as to the term or timing of the
issuance of the shares to Mr. Stoeckinger, we suggested the following changes be
made to the Agreement:

> 1.
>     The term of the Agreement shall be revised to specify that the effective
>     date of the Agreement shall be January 1, 2003.
>     
>     2.
>     As per Section 2.1 of the Agreement, we hereby extend the term of the
>     Agreement to terminate on January 31, 2004.

The changes are being made to clarify our understanding as to when the issuance
of the 20,000 shares was to begin (January 1, 2003) and for what length of time
we will be obligated to issue Mr. Stoeckinger additional shares (20,000 shares
per month ending on January 31, 2004, for a total of 260,000 shares).



On May 20, 2003, we issued Mr. Stoeckinger 80,000 shares of our common stock,
which was for the period from January 1, 2003 to April 30, 2003.



Item 6. Exhibits and
Reports of Form 8-K



(a) Exhibits



10.1 Secured Promissory Note with CPA Directed Investments

10.2 Letter Agreement with William Stoeckinger

31.1 Certification of Paul Branagan pursuant to Section 302 of the
Sarbanes-Oxley Act

32.1 Certification of Paul Branagan pursuant to Section 906 of the
Sarbanes-Oxley Act



(b) Form
8-K



None





SIGNATURES



Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.



PETROL OIL AND GAS,
INC.

(Registrant)





By: /S/Paul
Branagan

Paul Branagan,
President

Date: August 11, 2003